San Francisco — Monday’s surprise news that software giant Oracle is snatching up hardware-maker Sun Microsystems for $7.4 billion has Silicon Valley divided on whether the deal is good for the industry and bad for open-source software.

But there is consensus that the move is likely to be transformational, giving Oracle even more clout to take on other industry heavyweights such as IBM, Hewlett-Packard, and Microsoft.

The potentially most interesting question, says technology analyst Paul Saffo, is what might emerge after the dust settles from the deal and what many of the key players at Sun, which has a deep bench of technology talent, will end up doing if they leave the company. Sun is considered a visionary by many in the industry, and invented the programming language Java, which is used to build websites.

When companies fall in Silicon Valley, “It’s like a redwood falling in the forest. When it falls, it sheds light and new saplings evolve.” That’s how Silicon Valley constantly reinvents itself, he says.

The Oracle-Sun deal is the latest in a trend of tech consolidations. IBM, EMC, and even Dell have been growing in the past few years largely by buying up other companies.

But Saffo doesn’t see the growing consolidations in the industry as troubling. Neither does Charles King, the principle analyst at Pund-It, a California-based information technology research group. “We have been seeing continuing consolidation in the industry with the big getting bigger and the small disappearing from the face of the earth,” Mr. King acknowledges.

But that’s not necessarily a bad thing, he says, because big companies like Oracle and IBM have realized the importance of innovation in staying relevant.

“The large players understand that if they want to be competitive tomorrow, they have to be searching for the next best thing,” he says.

Silicon Valley saw this sort of consolidation before in the late ’90s when the dotcom bubble burst and many young Internet companies were bought up. But, he points out, that didn’t halt impressive innovations in new technology.

The technology that many worry might suffer under this deal is open-source software – software that doesn't have the same license and copyright limits as most commercial software. Sun owns one of the biggest and most popular open-source database management systems, MySQL, as well as the office suite, OpenOffice, and operating system, OpenSolaris.

What happens with those, says Mr. King, "qualifies as one of the 64,000 questions for this deal.” He adds, “They could let the technology wither and die.”

Not so fast, countered Michael Widenius, founder and original developer of MySQL, writing on his own blog. One path Oracle could pursue, he wrote, is to “embrace MySQL and Open Source and put their technical expertise on it to ensure that MySQL continues to be the most popular advanced Open Source database.”

Sun is the company that pioneered open source, notes Saffo. “They were the one pushing open when it was heresy.”

What Oracle now does with Sun's open-source databases remains to be seen. And many will be watching closely.